TOKYO, Dec 13 (Reuters) - U.S. S&P futures extended earlierlosses on Wednesday, as Democrat Doug Jones took a slight leadover Republican Roy Moore with about 86 percent of the votecounted in a bitter U.S. Senate race in Alabama.

A Jones victory could mean trouble for President DonaldTrump and his populist political base. It would narrow theRepublicans' already slim majority in the U.S. Senate, possiblymaking it harder for Trump to advance his policyagenda.

NEW DELHI, Dec 11 (Reuters) - India's main oppositionCongress party on Monday elevated Rahul Gandhi, the scion of thecountry's most fabled political dynasty, as its president,preparing to challenge the dominance of Prime Minister NarendraModi ahead of national polls in 2019.

In a long-awaited move, Gandhi, the great-grandson ofIndia's founding prime minister Jawaharlal Nehru, was electedunopposed to head the party. He will take the reins from hismother Sonia, the party's longest-serving president, since 1998.

Calling it a "historic occasion", the Congress party saidGandhi would take charge as president on Dec. 16.

Television broadcast images of party supporters celebratingand distributing sweets outside Congress offices in the capital,New Delhi, and the financial hub of Mumbai.

Gandhi's ascent coincides with state polls in Modi's westernhome state of Gujarat that are shaping as a test for the primeminister, who has been facing criticism for softening economicgrowth and poor implementation of a nationwide sales tax.

The Congress hopes a round of state elections offers theparty, and Gandhi, a shot at revival ahead of the next nationalelections, due in 2019.

Modi's depiction of Gandhi as an undeserving "prince" hashelped sideline Gandhi since the last national election, duringwhich time Congress has suffered some of its worst results inlocal elections.

The Nehru-Gandhi family has ruled the country for most ofits 70 years since independence from Britain. Gandhi's fatherand grandmother were both prime ministers, and bothassassinated.

GANDHI VS MODI

Following Congress' defeat in the 2014 polls, Gandhistruggled to convince voters, as well as many within his party,of his leadership skills. But senior Congress leader Ghulam NabiAzad said Gandhi was now ready for the next challenge.

"The entire country has lots of expectations from RahulGandhi," Azad said. "Much before he was elected he has shown hismettle. He knows his responsibility."

Modi's Bharatiya Janata Party (BJP) swiftly dismissedGandhi's election, saying he had become president only on thebasis of "dynastic principle".

"The new India is loath to (accept) dynastic principle andthe family character of the Congress further diminishes itsappeal," BJP spokesman G.V.L. Narasimha Rao told Reuters.

Gandhi, until now a vice-president of Congress, is widelyseen as a prime ministerial candidate if the party returns topower one day.

The 47-year-old has increasingly gone public in slammingModi's governance since the last national polls, as he looks toshed the reticent image that has for years been synonymous withhis political dynasty.

But he has also faced political backlash. In 2015, forexample, he took nearly two months of leave, prompting Modi'sparty to accuse him of "holidaying" while parliament was insession.

Modi still trumps Gandhi in popularity rankings, however.

Nearly nine of 10 Indians have a favourable opinion of himand more than two-thirds are satisfied with the direction inwhich he is taking the country, a Pew survey found in November.

Modi's favourable rating was 30 points more than Gandhi's,it showed.(Additional reporting by Nidhi Verma; Editing by SanjeevMiglani and Clarence Fernandez)

]]>Mumbai: Indian shares rose on Monday, tracking Asian peers that climbed on positive U.S. payrolls and Chinese trade data, with investors continuing to bet on a possible win for the country's ruling party in a key state election.

Markets are hoping for a big success by Prime Minister Narendra Modi and his ruling Bharatiya Janata Party in assembly elections in Gujarat, with tens of thousands voting in the first stage of the polls on Saturday.

A victory would help boost the government's re-election prospects during general elections in 2019 and reinforce its reform agenda, although analysts said it was already being priced into markets, making the margin of a win crucial to further boost shares.

Three recent big polls have predicted a victory for Modi's party, but with a greatly reduced majority.

"If BJP wins, it's definitely good for the markets, but unless they win by a landslide like they did in Uttar Pradesh and surprise everyone, markets (NSE index) should remain rangebound in the 10,000-10,500 levels," said R.K. Gupta, managing director at Taurus Asset Management Company.

The broader NSE Nifty was up 0.30 percent at 10,296.35 as of 0619 GMT, while the benchmark BSE Sensex was 0.35 percent higher at 33,365.35.

Property developer Unitech Ltd rose as much as 19.2 percent after a court allowed the government to take over management control of the debt-laden company on Friday.

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* NSE index up 0.30 pct, BSE index 0.35 pct higher

* Potential ruling party win in state poll factored in -analyst

By Arnab Paul

Dec 11 (Reuters) - Indian shares rose on Monday, trackingAsian peers that climbed on positive U.S. payrolls and Chinesetrade data, with investors continuing to bet on a possible winfor the country's ruling party in a key state election.

Markets are hoping for a big success by Prime MinisterNarendra Modi and his ruling Bharatiya Janata Party in assemblyelections in the western Indian state of Gujarat, with tens ofthousands voting in the first stage of the polls on Saturday.

A victory would help boost the government's re-electionprospects during general elections in 2019 and reinforce itsreform agenda, although analysts said it was already beingpriced into markets, making the margin of a win crucial tofurther boost shares.

Three recent big polls have predicted a victory for Modi'sparty, but with a greatly reduced majority."If BJP wins, it's definitely good for the markets, butunless they win by a landslide like they did in (in the northernstate of) Uttar Pradesh and surprise everyone, markets (NSEindex) should remain rangebound in the 10,000-10,500 levels,"said R.K. Gupta, managing director at Taurus Asset ManagementCompany.

The broader NSE index was up 0.30 percent at10,296.35 as of 0619 GMT, while the benchmark BSE indexwas 0.35 percent higher at 33,365.35.

Property developer Unitech Ltd rose as much as19.2 percent after a court allowed the Indian government to takeover management control of the debt-laden company on Friday.

(Reporting by Arnab Paul in Bengaluru; Editing by BijuDwarakanath)

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COLOMBO (Reuters) - Sri Lanka's coalition government on Saturday won the final vote on its 2018 budget which aims to boost investments and small businesses and cut the fiscal deficit to 4.8 percent of GDP from this year's 5.2 percent.

The budget was passed with 155 in favour, 56 against in the 225-member parliament.

The government aims to boost its 2018 tax revenue by 16.3 percent to 2.03 trillion rupees ($13.3 billion) year on year, to meet a commitment given to the International Monetary Fund in return for a $1.5 billion three-year loan.

"The budget focuses on liberalization to unlock the barriers to greater investment, trade, and start-up enterprises," Finance Minister Mangala Samaraweera told the parliament before the final vote.

With an eye on local elections next year, the budget has sought to empower younger voters and boost growth for the island's $81 billion economy. Growth is expected to pick up pace to 5 percent next year compared with this year's 4.5 percent.

Since coming to power in 2015, the coalition government of President Maithripala Sirisena's centre-left party and Prime Minister Ranil Wickremesinghe's centre-right party has boosted revenue and tried to rein in the fiscal deficit, in line with the IMF targets.

Sri Lanka faced a debt and balance-of-payments crisis early last year before the IMF came to its rescue with the loan.

The economy will face its highest debt repayment in the next two years and the government is in the process enacting legislation to borrow more than the annual budget limit to prevent a possible sovereign debt crisis.

Some opposition members backing defeated former leader Mahinda Rajapaksa, now a parliament member on the opposition benches, voted against the budget.

The government's medium-term economic strategy foresees cutting the deficit to 3.5 percent of GDP by 2020 while increasing direct taxes.

The International Monetary Fund on Thursday urged Sri Lanka to maintain a tightening bias on monetary policy until clear signs emerge that inflationary pressures and credit growth are moderating.

($1 = 153.1000 Sri Lankan rupees)

(Reporting by Shihar Aneez; Editing by Elaine Hardcastle)

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BERLIN (Reuters) - German Foreign Minister Sigmar Gabriel on Saturday denied a report that said the Social Democrat, whose party has agreed to enter talks with Chancellor Angela Merkel's conservatives on forming a coalition, was eyeing the post of finance minister.

News magazine Der Spiegel reported that Gabriel had recently told senior members of his SPD party that he was interested in becoming German finance minister if the SPD agreed to a re-run of the current 'grand coalition' with Merkel's conservatives.

"What Spiegel is writing is sheer nonsense," Gabriel told Deutschlandfunk radio. "I'm in a caretaker government and no one knows what the next government will look like."

More than two months after a national election, Germany has not managed to form a new government, so the conservative coalition from the last legislative period is still in power.

Merkel, who lost many supporters to the far-right in September's election, is banking on the SPD to extend her 12-year tenure after attempts to cobble together an awkward three-way alliance with the liberal Free Democrats and environmentalist Greens crumbled.

If the SPD were to agree to another 'grand coalition' - an option that the SPD says is by no means a foregone conclusion - and demand the finance ministry, it would likely result in changes to Germany's European policy such as more focus on spending and investment rather than austerity.

Wolfgang Schaeuble, who was Germany's conservative finance minister until he took on the role of president in October, became unpopular among struggling euro zone states during his eight years in office due to his focus on austerity.

SPD leader Martin Schulz said on Thursday that Europe could not afford to undergo another four years of the kind of European policy that Schaeuble had practiced.

(Reporting by Michelle Martin; Editing by Elaine Hardcastle)

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LONDON: British voters will be able to change the terms of the country's relationship with the European Union after leaving the bloc if they don't like the final Brexit deal, senior cabinet minister and pro-Brexit lawmaker Michael Gove said on Saturday.

Britain and the EU achieved "sufficient progress" in Brexit negotiations on Friday to allow them to move on to discussing future trade ties, in a move welcomed by Gove and other Brexit supporters in Prime Minister Theresa May's Conservative Party.

However, while Gove, who is Britain's environment minister, reiterated his support for May, he gave succour to critics of the deal by saying that if Britons were dissatisfied with the terms of Brexit, future governments could change it.

"The British people will be in control. By the time of the next election, EU law and any new treaty with the EU will cease to have primacy or direct effect in UK law," Gove wrote in a column in the Daily Telegraph.

"If the British people dislike the arrangement that we have negotiated with the EU, the agreement will allow a future government to diverge."

Britain is due to exit the EU in March 2019. The next election is not scheduled until 2022, though there has been speculation in British media that it could come earlier, given May's lack of a parliamentary majority and deep divisions within her party about Brexit.

Some eurosceptic voices outside the government have said that May has betrayed British "leave" voters and given in to EU demands with the agreement.

TOUGH WEEK

It has been a tough week for May after Northern Ireland's small Democratic Unionist Party (DUP) - whose support she needs in parliament - unexpectedly blocked an initial deal on Monday, leaving Britain and the EU scrambling to find wording acceptable to all sides ahead of next week's summit of EU leaders.

While agreement was eventually reached on Friday, Gove said that all UK proposals were provisional on a final deal being done, and even then, that arrangement could be revisited by future governments.

Matthew Parris, an anti-Brexit columnist and former Conservative lawmaker, told BBC radio that Gove might envisage a situation in which he would be spearheading a new approach to Brexit.

But Gove, who was briefly in the running to lead the party last year, praised May on Saturday, and said the deal was a result of her "tenacity and skill".

Fellow pro-Brexit cabinet colleague Andrea Leadsom defended his comments, saying it did not imply that May would be replaced before the next election.

"It's simply the case that in taking back control (from Brussels)... it will be for the voters to determine what future governments do," Leadsom told BBC radio. "I think it is a statement of the obvious."

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By Nigel Hunt

MILTON KEYNES, England (Reuters) - Britons who voted for Brexit in the hope of slashing immigration seem set for disappointment. In the farming and food industries at least, any exodus of Polish and Romanian workers may simply be followed by arrivals of Ukrainians and Filipinos.

From dairy farms to abattoirs, employers say not enough Britons have an appetite for milking cows before dawn or disembowelling pig carcasses - jobs often performed by workers from the poorer, eastern member states of the European Union.

With unemployment at a four-decade low of 4.3 percent, even Brexit supporters acknowledge the industries will need some migrant workers after Britain leaves the EU in 2019, ending the automatic right of the bloc's citizens to work in the country.

Employers praise eastern European staff for their skills and work ethic. "They are a massively valuable part of our workforce and a massively valuable part of the food industry overall," said Adam Couch, chief executive of Cranswick plc, a meat processing group founded by pig farmers.

Food and drink is the largest UK manufacturing sector, with a turnover of 110 billion pounds ($147 billion) in 2015, government figures show. Much of it depends heavily on staff from elsewhere in the EU, mainly the post-communist east.

For example, the British Meat Processors Association says 63 percent of workers in the sector come from other EU countries and in some plants it can be as high as 80 percent.

The proportion has risen partly due to increased demand for more labour intensive products such as boneless meat. Association members have found it impossible to recruit the additional employees needed from Britain, the BMPA says.

Pro-Brexit campaigners say Britain needs to reduce its reliance on EU workers. "Our sights should be firmly set on raising the skill level of our own domestic workers, employing domestic whenever we possibly can and automating," said Owen Paterson, a member of parliament for the ruling Conservatives.

But Paterson, who as a former Environment Secretary was responsible for UK agricultural policy from 2012-14, added: "Where there is a clear shortage and no technological solution, by all means bring in labour but the good news is we wouldn't be limited to the EU. We will have the whole world to choose from."

MONEY FOR A MONTH

On the meat production line, Romanian Dumidru Voicu explained the attractions of working at Cranswick's plant in Milton Keynes, a town northwest of London.

"I just want to do something with my life, save some money and make my own business. The money for a week here is the money for a month in Romania," said Voicu, who arrived in the country about the time that Britons voted to leave the EU in June last year.

An estimated 27,000 permanent staff from elsewhere in the EU worked in British agriculture last year, House of Commons staff noted in a briefing paper for members of parliament. This figure is swollen at times by around 75,000 seasonal workers.

A further 116,000 EU citizens worked in food manufacturing. The Food and Drink Federation predicts the sector, which employs about 400,000 people, needs to recruit another 140,000 by 2024.

The government, which wants to reduce immigration sharply, has yet to announce its post-Brexit policy but farm minister George Eustice has recognised employers' concerns. "Leaving the EU and establishing controlled migration does not mean closing off all immigration," he told parliament in earlier this year.

However, a government document leaked in September showed that restrictions for all but the highest-skilled EU workers were under consideration.

Such a possibility alarms farm employers. "Without EU labour there will be no British pig industry as we know it," said Zoe Davies, chief executive of the National Pig Association.

British farmers have relied on foreign labour for a long time, at least around harvest time. A Seasonal Agricultural Workers Scheme was introduced shortly after World War Two.

The government ended it in 2013 before Romanians and Bulgarians won the automatic right to work in Britain, arguing that there were now enough EU workers to fill farm vacancies.

With EU citizens to lose that right on Brexit, the National Farmers' Union (NFU) wants the scheme - or something similar - reinstated. This may mean going back to the time when people from beyond eastern Europe filled farm jobs.

Michael Oakes, chairman of the dairy board at the NFU, says older colleagues remember when people from countries such as the Philippines worked on British farms.

"There are other countries in the world that would help to solve the problem but at the moment because they are not within the EU they are not necessarily able to come in and work."

Filipinos already work on New Zealand farms but such an idea could prove politically difficult in Britain as the pro-Brexit side fought the referendum on promises to curb immigration.

Many of the 17 million Britons who voted to leave are likely to be unhappy if they find eastern Europeans simply replaced by non-EU workers such as Filipinos or Ukrainians.

"Perhaps we need to broaden out the opportunities but a lot of people voted for Brexit because of immigration reasons, so it is a tricky one for the government," said Oakes.

MAKING SACRIFICES

Any new seasonal scheme could still recruit in the EU, but might be forced to widen its scope to get the required numbers.

Net migration to the UK fell to 230,000 in the year to June, far from the government's ambition of arrivals "in the tens of thousands". Still, EU citizens accounted for three quarters of the 106,000 drop, the Office for National Statistics reported.

The figures present a mixed picture, with a net 20,000 Poles leaving the country in 2016 but 50,000 Romanians arriving.

But some eastern Europeans say they feel less welcome since the referendum and resent the negative attitude of some Britons.

"I was quite upset. Why do you have a problem with me if I am coming to take a job you don't want and I am paying tax?" said Zoltan Peter, who came to England in 2009 to work on a dairy farm in western England, initially leaving his wife and baby daughter at home in Romania.

Peter now works as a regional manager for LKL, a firm which recruits workers to the dairy industry, but says the early years were not easy. "I didn't catch my daughter starting to talk, but you sometimes you make sacrifices and eastern European people are making sacrifices," he told Reuters.

A drop in sterling since the referendum has also made Britain less attractive for farm workers who earn at least 7.20 pounds an hour. That was worth 41 Polish zlotys before the vote but now it buys only 34.

Part of the answer may lie in a drive to recruit and train more British workers, despite Peter's doubts.

Oakes said he needed people prepared to work long, unsocial hours often in cold, wet conditions. Milking on his farm starts at 4.30 am and the day does not end until 8 pm. "It is an early start or a late finish, and occasionally on bad days you might have to do both," he said.

($1 = 0.7492 pounds)

(Additional reporting by Ana Ionova; Editing by Veronica Brown and David Stamp)

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By Francesco Guarascio

BRUSSELS (Reuters) - The outgoing president of the Eurogroup said on Thursday that euro zone finance ministers were likely to reject a European Commission proposal to create an EU finance minister combining the roles of commissioner and Eurogroup chair.

The bloc's executive unveiled a package of measures aimed at strengthening the 19-country euro zone, including the creation of a European Minister of Economy and Finance who could take office at the end of 2019.

"I think the Eurogroup will insist on having its own chair," Jeroen Dijsselbloem told lawmakers in the European Parliament's economic committee, dismissing the "double-hatting" idea.

"There is a strong sense in the Eurogroup that there should be a distinction between the role of the Eurogroup, which is a group of ministers, and the role of the Commission, which is the guardian of the treaties," said Dijsselbloem, a former Dutch finance minister who will make way for Portuguese Finance Minister Mario Centeno in mid-January.

He said the commission's ideas on the new role were "very broad and also still quite vague".

The commission said the new minister would "be responsible for identifying an appropriate fiscal policy for the euro area as a whole," according to a document published on Wednesday.

"Does it mean the EU minister of finance gets control over national budgets? That would be a huge step, but would also raise huge issues," Dijsselbloem said, citing concerns over democratic legitimacy and constitutional issues.

Most money spent by governments goes on policies that are under full national competence, such as healthcare, welfare, pensions and education, Dijsselbloem said.

"If you have such a direct influence over the budget, you should also have some influence over where it is spent," he stressed.

The commission has tried in past months to increase its influence over the overall fiscal stance of the euro zone, in a bid to favour investments by countries in better shape, like Germany. Those attempts were blocked in the Eurogroup.

The EU executive is already in charge of monitoring the national budgets of EU members and can propose sanctions for states breaching common fiscal rules, which require governments to keep their deficits and debt levels under control.

Brussels can recommend policy measures to improve a country's fiscal stance, but cannot decide over how money is spent at the national level.

If the commission were given powers to influence national expenses on social issues or other policies under national competence, a change to the EU constitutional treaty would be required.

The commission made it clear on Wednesday that its proposal would not require a treaty change.

"The establishment of a European Minister of Economy and Finance could be pursued (..) within existing Treaty arrangement," it said in a document.

BERLIN (Reuters) - The leader of Germany's Social Democrats (SPD) took aim at U.S. technology firms Apple, Facebook and Google on Thursday, saying a strong Europe was needed to make sure they stick to the rules.

Martin Schulz, who hopes to persuade his party to approve talks with Chancellor Angela Merkel on forming a new coalition, told a congress of his SPD party that Ireland was complicit in allowing companies like Apple to avoid billions of euros in tax.

He also called for the creation of a European finance minister, who should fight tax evasion by reining in the race to the bottom in tax policy among member states.

"Only a strong Europe can force platform giants like Facebook and Google to respect our rules and basic rights," he said.

NEW DELHI, Dec 7 (Reuters) - Indian Prime Minister NarendraModi was in the final phase of campaigning on Thursday to retainpower in his home state and stave off the most serious challengeyet from a combined opposition.

The election for a new legislature in the western state ofGujarat this weekend is turning out to be a greater challengefor Modi than anticipated, the polls show, as rival partiesseize on discontent caused by a slowing economy.

Gujarat is where Modi earned his spurs as abusiness-friendly chief minister who cut red tape and graft andturned it into an economic powerhouse.

But an unpopular national tax and a shock move last year towithdraw most currency in a fight against graft has hurtGujarat, like the rest of the country, and its businessmen aremaking loud complaints.

Three big polls carried out in the run-up to the vote onSaturday and next week have predicted a victory for Modi'sruling Bharatiya Janata Party (BJP) but with a greatly reducedmajority.

An ABP-CDS poll this week gave the BJP 91-99 seats in the182-member state house and the main opposition Congress 78-86,suggesting a close fight. To win a party needs 92 seats.

The surveys have often gone wrong, though, and Modi himselfremains far more popular across the country than his rivalsincluding Rahul Gandhi who is leading the Congress charge toweaken Modi in his home base.

Modi has thrown himself into the campaign, addressing dozensof rallies over the past month, saying he alone could deliver ondevelopment. On Thursday, he was due to address party colleagueson their mobile phones to ensure a strong voter turnout.

Amit Shah, the president of the BJP, said the party had fullconfidence in Modi's ability to deliver an emphatic victory.

"He knows that only an absolute majority in Gujarat pollswill legitimise his reforms and silence critics," Shah said.

Votes from the election will be counted on Dec.18 and theresults announced the same day.

Gujarati businesses - who form the core of Modi's supportbase - have complained about the new Goods and Services Tax asaggravating tough economic conditions.

Jagdip Desai, a sanitary ware manufacturer, said the complextax procedures had come on top of slowing demand and he had tofire 3,000 workers.

(Reuters) - Two years ago, Alan Gertner was head of Google's Asia-Pacific sales team in Singapore, handling more than $100 million in business.

Now, he begins his day in a small Toronto office, building a cannabis brand that sells fancy smoking accessories such as vaporizers and bongs that cost up to $335 CAD ($261.72 USD).

Gertner is among a growing group of entrepreneurs and investors who are trading in high-paid corporate jobs in the technology and finance sectors to launch start-ups focused on the fast-growing marijuana industry.

Two decades after the first legalization of medical marijuana by a U.S. state, pot-based businesses are professionalizing their operations by luring top talent from other industries and billions of dollars in investments from Wall Street firms. A new commodity index even offers data on the going rates for greenhouse and field-grown weed.

Gertner still gets surprised reactions to his career change, as when his mother asked: "Can't you just get another job at Google?"

And yet he's raised $10 million in capital in ten months as the chief executive of Toyko Smoke, despite the continuing taboos and legal risks in the industry.

The legal cannabis market, currently worth about $8 billion, is predicted to triple in size to $22.6 billion in total annual sales by 2021, according to cannabis industry tracker, Arcview Market Research. That could make it bigger than the America's most profitable sports organization, the National Football League, which saw about $13 billion in revenue last year and aims to reach $25 billion by 2027.

So far in 2017, there have been at least 27 investments by venture capital funds in cannabis companies, compared with just 10 deals in 2016 and 9 deals in 2015, according to venture capital data provider CB Insights.

The influx of capital helps finance the paychecks of 150,000 workers in the legal U.S. pot industry, representing job growth of 20 percent from a year ago, according to an estimate from the cannabis website Leafly, a marketing firm for dispensaries and other cannabis firms.

Eric Eslao, founder of Defonce Chocolatier - which makes artisanal cannabis-infused chocolates costing $20 a bar - was a senior production manager at Apple just over a year ago. He feared the stigma of joining the weed industry, but it didn't stop him.

"The opportunity was too good not to make the jump," he said.

LEGAL RISKS, CHALLENGES

Thirty states have legalized marijuana for recreational or medical use, but possession and sale is still banned at the federal level.

The administration of President Donald Trump has sent mixed signals on its enforcement policy. Attorney General Jeff Sessions has vowed to crack down on the pot trade in states with legalization laws, but Trump has extended a ban on using federal funds to interfere with the industry through the end of this year.

Americans increasingly support marijuana legalization, according to the Reuters/Ipsos opinion poll. The number of adults who believe it "should be legal" to possess small amounts of marijuana rose to 54 percent in a poll conducted between Oct. 27 and Nov. 10, up from 41 percent in a similar poll in 2012.

Still, the specter of federal enforcement makes it difficult for cannabis-related firms to get banking services. Many continue to deal in cash or pay hefty fees for accounts.

The banks that work with cannabis-related firms are mostly community institutions in states where the industry is legalized, and their service is limited to accepting cash deposits.

Cannabis investment is still dominated by wealthy individuals, but that is changing as the industry grows, attracting venture capitalist and equity investors who until recently were reluctant to finance cannabis firms.

They are drawn by a wide-open landscape of opportunity, said Eric Hippeau, managing partner at Lerer Hippeau Ventures, a New York-based venture capital firm well-known for its investments in high-profile media startups such as Twitter Inc and Buzzfeed.

"It's an industry that is starting from scratch with no infrastructure," Hippeau said. "There are many promising cannabis-related software startups that are able to easily raise money."

Some of these startups provide seed-to-sale cannabis tracking system software and inventory management. Hippeau Ventures earlier this year joined a $3 million funding round for LeafLink, a business-to-business platform that provides a market for dispensary owners to buy inventory.

Other prominent venture firms that have warmed to cannabis include Founders Fund, started by PayPal co-founder Peter Thiel, which has invested in Privateer Holdings, a cannabis private equity firm.

Prominent Silicon Valley venture capitalists 500 Startups, DCM Ventures, along with New York-based Great Oaks Venture Capital, have all backed Eaze, a medical marijuana delivery app that allows patients to order cannabis on demand.

"The stigma is slowly going away, and you are seeing some real talent, in terms of technology entrepreneurs and quality engineers," said Kyle Lui, a principal at DCM Ventures.

Investors who have taken the initial plunge into the quasi-legal marketplace seem eager to take on more exposure, said Jim Patterson, CEO of Eaze, a three-year old company has raised $51.5 million in five rounds from more than a dozen investors.

Such firms believe its "a good time to double down," Patterson said.

RISK MANAGEMENT

Some investors have steered toward technology and support services, which carry less legal risk than cultivating or selling the weed itself.

These include dating apps for cannabis users such as High There and My420Mate, as well as WeGrow, an educational app that teaches people how to grow cannabis. HelloMD is an online platform connecting doctors and cannabis patients.

Among the signs the market is maturing is the development of information services that collect data on trading of cannabis and publish guideline prices. Similar services are common across commodity markets - from oil and gas to corn and cotton - and are used by industry participants as price benchmarks.

New Leaf Data Services LLC, a Stamford, Connecticut-based start-up, published its first assessment of U.S. cannabis prices about two years ago. Newleaf compiles information gathered from cultivators and dispensaries, transaction data from market participants and data from vendors and associations.

Investors can also follow the value of marijuana firms through stock market indexes such as the Horizons Marijuana Life Sciences Index ETF, which tracks the performance of a selection of publicly listed cannabis companies in North America.

The value of the index is up about 70 percent over the last three months, thanks to star performers such as Canopy Growth Corp, a producer and retailer of medical cannabis products - up 112 percent for the year - and Aphria Inc, a cannabis producer, up 132 percent this year.

"The cannabis business is really about risk arbitrage. There are chances of a higher return because the risk is high," Patterson said. "Investors get that."

The long-term risk may be lower, however, as a growing number of Americans express support for marijuana legalization and the industry creates jobs and tax revenues.

U.S. residents also seem increasingly aware of the futility in preventing illegal marijuana use, said Ian Laird, a lawyer and co-founder of New Leaf.

"The evolution or rollback of prohibition is inevitable," he said. "It's not like it stopped anyone from getting it."

LONDON (Reuters) - There will be no Brexit deal done this week and hopes are fading fast in London that Prime Minister Theresa May will go back to Brussels on Thursday, the political editor of The Sun newspaper said on Twitter.

Tom Newton Dunn cited a source in the Democratic Unionist Party, which props up May's minority government, as saying: "No deal this week".

(Reporting by Andy Bruce; editing by Guy Faulconbridge)

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By Saikat Chatterjee

LONDON (Reuters) - Sterling investors remain hesitant about chasing the rallying pound higher even as the British government said it was close to an agreement with the European Union on how to move Brexit talks onto trade next year.

British hopes of securing a deal with the European Union were dashed on Monday by Prime Minister Theresa May's kingmakers in Belfast. The government is holding fresh talks and said on Tuesday it remained confident of reaching an agreement.

After spending most of 2017 on the back foot against a broadly weak dollar, market expectations on sterling have shifted considerably in recent weeks towards betting on a breakthrough in Brexit negotiations with the British currency rising to more than a two-month high last Friday.

High-frequency indicators of market positioning and options market hedging have also shifted markedly to show green shoots of optimism emerging.

Speculative bets on sterling, shown in data compiled by the U.S. Commodity Futures Trading Commission and often seen as a proxy for hedge fund positioning, outweighed those betting on a fall in sterling for the first time since the Bank of England raised interest rates in early November.

Prior to that brief pre rate rise flurry, there had not been a net long position in sterling since October 2015.

What's more the cost of one-month options to buy sterling in the derivatives market exceed that of options to sell it for the first time since October 2017.

But despite sterling's bounce in recent days, investors remain wary about the currency's outlook pointing to the long complicated negotiations before Brexit becomes a reality in 2019 and the underlying weakness of the British economy.

"There is still a lot of work to be done before we get any clarity and to take big positions in this headline-driven market is fraught with dangers," said James Binny, head of currencies at U.S. financial group State Street Global Advisors in London.

So despite a cautious return in long sterling bets in the currency markets, the duration of those positions have become shorter, indicating how nervous markets are.

So far, these net sterling long bets are only a week old, compared to in October which remained for a month. The longest duration of long sterling bets was for a year between Sept 2013 to late 2014, according to CFTC data.

At the heart of this nervousness is a view that any Brexit outcome, either "soft" or "hard", will weigh on the economy at a time when other major world economies such as Europe and the U.S. are firing on all cylinders.

"The key issue for sterling is that from an economic standpoint it looks tough and any bounce after a Brexit talks breakthrough will be a buy-the-rumor and sell-the-fact trade," said Richard Benson, co-head of portfolio investments at Millennium Global Investments Ltd in London.

Annual growth forecasts will average 2.4 percent this year and 2.2 percent next year across the 19-member eurozone currency bloc compared with UK growth of 1.5 percent in 2017 and 1.2 percent in 2018, according to OECD forecasts.

TRANSITION DEAL

To be sure, a breakthrough in the talks would lift the fog of uncertainty hanging over British companies, encouraging them to invest more and ultimately lift economic activity in itself.

Despite the breakdown in talks at the last minute on Monday the border issue with Ireland, foreign exchange derivative markets are betting on a breakthrough.

Three-month 'risk reversals' on sterling, which shows the relative pricing of puts and calls on the pound, have flipped to a bias of more sterling strength in the last week, though they remain below a 2017 high hit in early September.

Kallum Pickering, senior UK economist at Berenberg in London expects a transition deal to materialize by late 2018 an outcome that would boost economic growth to 1.8 percent.

It would also lead to a significant revaluation on sterling which according to SSGA's Binny is trading about 15 percent cheaper against the dollar on a valuation basis.

On a trade-weighted basis, sterling is trading at a six-month high and just one percent below a 2017 peak.

WALKING A FINE LINE

But even assuming a successful negotiation of the complex series of Brexit talks, sterling still has considerable headwinds against its two major rivals, namely the dollar and the euro.

Some market participants expect the U.S. may end up raising interest rates by as much as four times over the next 12 months after a landmark tax code overhaul over the weekend.

John Taylor, senior fixed income portfolio manager at Alliance Bernstein in London said the UK will have to raise rates by two times "at least to hang on to the coat tails of the Fed."

"The Bank of England can't afford to not tighten at all as that would weaken the currency a lot and if they hike more they may end up tipping the economy into recession well before Brexit kicks in," Taylor said who is underweight duration on UK debt.

Bond markets in the UK only expect one rate hike over the next twelve months. Against Europe, it is more of a differential growth story with growth in the currency bloc expected to pick up steam relative to the UK.

"Sterling movements have become kneejerk and pavlovian depending on the headline of the day and institutional investors are now focusing on the economic data," said Marc Ostwald, market strategist at ADM Investor Services.

BRUSSELS (Reuters) - Euro zone finance ministers on Monday chose as their next chairman Portugal's Mario Centeno, a move that could embolden countries seeking deeper integration of the 19-country's bloc.

Centeno, 50, will succeed Dutchman Jeroen Dijsselbloem on Jan. 13, chairing monthly meetings of the Eurogroup, which comprises the finance ministers of the euro zone and is the European Union's most powerful economic policy-setting body.

The Harvard-educated economist has led Portugal through a strong recovery from a 2011-14 debt crisis and a euro zone bailout programme. The economy is growing at its fastest pace in at least 10 years and the budget deficit is set to fall to its lowest in many decades.

"It is an honour to be the next chair of the Eurogroup," Centeno told a news conference on Monday. "We have a very unique time window to further prepare our economies and societies, are very much focused on that."

His election was supported by France, Germany and Italy, the bloc's largest countries. He defeated in two rounds of votes three other candidates among the bloc's finance ministers: Dana Reizniece-Ozola of Latvia, Pierre Gramegna of Luxembourg and Peter Kazimir of Slovakia.

He will take office in January as the euro zone prepares for a range of structural reforms that could substantially change the way the bloc functions and channel more common resources to tackle economic weaknesses in its members.

EU officials see the first six months of 2018 as the best moment to push through these difficult reforms, before Britain's exit form the EU, campaigning before European elections and a change of the European Commission in 2019 take the focus elsewhere.

The European Commission will unveil a package of proposals on deeper economic integration of the euro zone on Wednesday aimed at making the single-currency area more resilient to potential future crises.

Centeno may play a role in favour of some of the most ambitious ideas, like a euro zone budget, French officials said. Germany has opposed this idea.

He was appointed to Portugal's finance ministry in 2015 by Socialist prime minister Antonio Costa. He reversed some of the austerity measures introduced during the bailout.

But he has retained a strong grip on public finances, insisting that EU budget goals must be met. Germany's acting Finance Minister Peter Altmaier said he backed Centeno because he "supports the stability and growth pact," which is the set of EU fiscal rules.

INCLUSIVE GROWTH

During his 2-1/2-year term, Centeno will have a key role in coordinating efforts to deepen euro zone integration by establishing a euro zone budget and finance minister as well as a sovereign insolvency mechanism or transforming the euro zone bailout fund into a European Monetary Fund.

He will also oversee the end of the third bailout programme for Greece in August 2018, after which the country is expected to fully return to finance itself on the markets.

He noted the Portuguese government's "firm determination" to contribute to the EU and the euro zone.

He said he would work to promote "inclusive prosperity" to end economic difficulties experienced by European citizens during the economic crisis.

"I have the ability and will try to use it to bring all the ideas (…) to promote the inclusive growth and prosperity that may put an end to a period that was very difficult for Europe," Centeno said in his first news conference after his election.

CARACAS (Reuters) - Days before masked agents arrested him, family and friends pleaded with Eulogio Del Pino to flee, warning that he could be next among executives detained or pursued, one after another, in a mounting purge of Venezuela's faltering oil industry.

But the former oil minister, detained by police before dawn on Nov 30, was reluctant to believe he could soon be among those targeted in what President Nicolas Maduro has characterized as a cleanup of the all-important sector.

"I told him: 'Go!'," said one of three people who described the leadup to the former minister's detention. "But he told me 'I haven't done anything wrong. I trust that they're not going to do anything bad to me.'"

That trust, the product of three years in which Del Pino held the top two jobs in Venezuela's oil ministry, now appears alarmingly misplaced. Maduro is charging Del Pino and many other former industry executives with corruption and blaming them for economic woes now crippling the Andean nation.

"I'm not going to shield anyone," Maduro said in a speech on Nov 28, as he swore in a general who replaced Del Pino as oil minister. "If you're corrupt, you have to pay with jail and return what you've stolen."

The crackdown has led to uncertainty, panic and paranoia across the sector, with as many as 65 former executives arrested over the past four months. Prosecutors, critics say, have provided scant evidence for the charges.

Corruption has long plagued the OPEC member's oil industry and much of the broader Maduro government, a leftist administration struggling with an imploding economy, soaring crime and debilitated public services.

But critics of Maduro's beleaguered administration, and many within the oil industry itself, see the purge as nothing more than an effort to eliminate rivals within the sector and consolidate control ahead of presidential elections next year.

"Maduro wants control of PDVSA and control of its cash flow," said opposition legislator and economist Angel Alvarado, using the initials for state-controlled oil company Petroleos de Venezuela SA.

Venezuela's Information Ministry did not respond to a request for comment. PDVSA and the oil ministry did not respond to requests for comment either.

"I NEED A REST"

It is not clear whether any of the charges against Del Pino are substantiated. Prosecutors, without presenting any evidence, accused him of belonging to a "cartel" that operated a roughly $500 million corruption scheme in the western state of Zulia.

But the Stanford-educated engineer, who led the ministry until Nov. 26 and PDVSA for three years before that, was previously known as a government loyalist, committed to Maduro's vision for "21st century socialism."

Only after he was ousted from the ministry, the three people familiar with his arrest said, did Del Pino finally begin to believe that his time was probably up. His final days as a free man illustrate how swiftly fortunes can shift for even senior officials in Maduro's government.

Just after his firing, Del Pino told Reuters in a WhatsApp message: "I need a rest."

On Nov. 29, three days after his ouster, an exhausted Del Pino went to Avila, a verdant mountain that towers over Caracas, the capital, where he liked to hike, one of the people said.

Del Pino found a quiet spot under a tree and recorded a video on his cell phone. He said he believed he was about to become a "victim" of an "unjustified attack."

Before sunlight the following morning, hooded and armed military intelligence agents burst into his home and arrested him. Footage of the detention showed Del Pino wearing the burgundy-colored soccer shirt of Venezuela's national team.

Later that day, the video Del Pino recorded appeared on his Twitter account. "I hope the revolution will give me the right to a legitimate defense," he said, referring to the government in the militant terms embraced by Maduro.

Del Pino did not respond to requests for comment on WhatsApp, where he had recently changed his profile picture from one of him in a PDVSA hat to one of his children.

After Del Pino's detention, stunned workers at PDVSA's Caracas headquarters, where he was generally well-liked, watched the state TV footage on screens in company elevators.

Fear has gripped employees at both institutions, according to a half-dozen current and former PDVSA insiders as well as foreign oil executives. Managers are scared to sign routine documents in case it could be used against them.

FALL FROM GRACE

Maduro promoted Del Pino, who was born in the Canary Islands and holds a Spanish passport, from PDVSA's exploration and production division to the company's top job in 2014.

At the time, foreign oil executives and analysts largely welcomed the arrival of the genial and low-profile technocrat. He replaced Rafael Ramirez, a once-powerful loyalist of the late Hugo Chavez, Maduro's predecessor.

Ramirez, who dominated Venezuela's oil industry for a decade, sought to make PDVSA "redder than red." He urged workers to wear red shirts in support of Chavez's socialist movement and to attend pro-government rallies.

Del Pino, by contrast, eased up on revolutionary garb and attendance at militant gatherings. He also sought closer relationships with foreign partners frustrated by currency controls and a lack of professionalism at PDVSA.

Still, many PDVSA insiders and oil executives were ultimately disappointed with Del Pino's management. Instead of improvements, he presided over a major production fall that brought Venezuela's oil output to near 30 year-lows.

Del Pino ultimately found his hands tied at a company where intervention by the government is common. Last January, Maduro replaced many of his top executives with political and military appointees.

Whether Del Pino and other arrested executives are ultimately found guilty or not, many in Venezuela see opportunism behind the ongoing purge, not a concerted effort to stamp out graft.

The industry, after all, has been under tight control of the ruling Socialist Party since shortly after Chavez came to power in 1998.

Although the government ridiculed a report last year by the opposition-run Congress, finding that some $11 billion went missing at PDVSA over a decade, it now recognizes that many voters support the anti-corruption stances espoused by rivals.

"The opposition has been pushing for a fight against corruption, and now Maduro wants to appropriate that," said Alvarado, the opposition lawmaker.

After surviving major protests this year and pushing through a controversial pro-government legislative superbody, Maduro is feeling empowered, government officials said. He seeks to fortify his position for re-election next year.

He is also expected to continue finding ways to target perceived threats to his political power. Some in Venezuela see Del Pino's arrest as a way of getting at an old rival: Ramirez, the former PDVSA boss.

Ramirez, until recently Venezuela's envoy to the United Nations, is believed by many in the government to have presidential ambitions.

Although Ramirez has not been mentioned by prosecutors, senior government officials increasingly refer to his time at PDVSA as a period when "mafias" were formed and executives like Del Pino grew ascendant.

This week, after Ramirez criticized the president in recent opinion articles online, Maduro fired him and summoned him back to Caracas, according to people familiar with the clash.

Late Friday, police arrested Diego Salazar, a relative of Ramirez, in what prosecturos said was another corruption investigation.

LONDON (Reuters) - Britain's opposition Labour leader Jeremy Corbyn warned Morgan Stanley that bankers are right to regard him as a threat because he wants to transform what he cast as a rigged economy that profits speculators at the expense of ordinary people.

Morgan Stanley cautioned investors on Nov. 26 that political uncertainty in Britain was a bigger threat than Brexit given the risk of Corbyn winning power and then dismantling what was once seen as one of the world's most stable free-market economies.

"Bankers like Morgan Stanley should not run our country but they think they do," Corbyn, a 68-year-old socialist, said in a video posted on Twitter that showed the towers of the City of London and Canary Wharf financial districts.

"So when they say we're a threat, they're right: We're a threat to a damaging and failed system that is rigged for the few," he said.

Morgan Stanley declined to comment.

London, which vies with New York for the title of the world’s financial capital, dominates the $5.1-trillion-a-day global foreign exchange market and is home to more banks than any other financial centre.

But many bankers, CEOs and investors were spooked by the shock 2016 vote for Brexit and have been dismayed by the political turmoil which followed, including Prime Minister Theresa May's botched gamble on a snap election in June.

May lost her party its majority in parliament in that election while Corbyn's unexpectedly strong result in the vote has convinced many of Labour's opponents that Corbyn is a potential prime minister if May's government falls.

"CUBA WITHOUT THE SUN"

Kept in power with the support of a small Northern Irish political party, May has just over a year to negotiate Britain's divorce from the EU that will shape Britain's prosperity and global influence for generations to come.

Now many investors fear Corbyn, who was once dismissed by his own party as an out-of-touch peace campaigner with no hope of ever winning power, could win the top job if the political turmoil continues in London.

One senior executive at a top U.S. investment bank said that at a meeting in New York recently concerns over Corbyn trumped concerns about Brexit.

"Their top concern was not what's happening in Germany and Spain, or North Korea and Trump: their main concern was what's happening in the UK and what Corbyn might mean for the country," the executive, who spoke on condition of anonymity said.

"It's like Cuba without the sun," the executive said.

Morgan Stanley said Britain now faced a "double whammy" of uncertainty from Brexit and the domestic political instability.

"From a UK investor perspective, we believe that the domestic political situation is at least as significant as Brexit," Morgan Stanley analysts said in a note to clients.

Morgan Stanley said there was a high likelihood of another national election in late 2018 -- just months before Britain is due to leave the EU on March 29 2019.

The bank's analysts said a Labour victory could mark the biggest shift in British politics since the late 1970s when Margaret Thatcher won victory, started to privatise chunks of the economy and opened up London to U.S. and Japanese banks.

"It is certainly plausible that the Labour Party could ultimately moderate some of its more radical policy ideas; the alternative could be the most significant political shift in the UK since the end of the 1970s," Morgan Stanley said.

"SPECULATORS AND GAMBLERS"

Corbyn has cast bankers as the villains behind the 2008 financial crisis and has promised to increase taxes on the banks and investment funds which trade out of London, including their staff through higher income taxes.

Corbyn, who has promised sweeping renationalisation, higher public spending and tax rises for the rich, said banks like Morgan Stanley were speculators who had left ordinary people to pay the price for their greed.

"These are the same speculators and gamblers who crashed our economy in 2008 and then we had to bail them out," Corbyn said. "Their greed plunged the world into crisis and we're still paying the price."

Corbyn said Morgan Stanley CEO James Gorman earned tens of millions personally and banks paid out billions of pounds worth of bonuses while Labour was the party of the people and a government in waiting.

Such "banker bashing" could be popular with some voters in Britain where financiers are often portrayed as vastly overpaid. Financial services contributed 11.5 percent of total UK government tax receipts in 2016.

Corbyn's Labour won 40 percent of the votes cast in June 2017 while May's Conservatives won 42 percent.

Morgan Stanley, which opened on Wall Street in 1935, set up its European headquarters in London in 1977 and it now has over 5,000 staff, most at a block in Canary Wharf. Morgan Stanley did not receive a British government bailout during the 2008 crisis.

(Additional reporting by Anjuli Davies in London and Stephen Jewkes in Milan; Editing by William Maclean and Angus MacSwan)

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LONDON: Britain's opposition Labour leader Jeremy Corbyn warned Morgan Stanley that bankers are right to regard him as a threat because he wants to transform what he cast as a rigged economy that profited speculators at the expense of ordinary people.

Morgan Stanley last month warned that political uncertainty in Britain was a bigger threat than Brexit for some domestic investors given the risk of Corbyn winning power and radically changing Britain's free-market economy.

"Bankers like Morgan Stanley should not run our country but they think they do," Corbyn, a 68-year-old socialist, said in a video posted on Twitter.

"So when they say we're a threat, they're right: We're a threat to a damaging and failed system that is rigged for the few," he said.

London, which vies with New York for the title of the world’s financial capital, dominates the $5.1-trillion-a-day global foreign exchange market and is home to more banks than any other financial centre.

But many bankers, CEOs and investors were spooked by the shock 2016 vote for Brexit and have been dismayed by the political crises which followed, including Prime Minister Theresa May's botched gamble on a June snap election.

May lost her party its majority in parliament in that election while Corbyn's unexpectedly strong result in the vote has convinced many of Labour's opponents that Corbyn is a potential prime minister if May's government falls.

SPECULATORS AND GAMBLERS?

Kept in power with the support of a small Northern Irish political party, May has just over a year to negotiate Britain's divorce from the EU that will shape Britain's prosperity and global influence for generations to come.

"From a UK investor perspective, we believe that the domestic political situation is at least as significant as Brexit," Morgan Stanley analysts said in a Nov. 26 note to clients.

In the note, Morgan Stanley said there was a high likelihood of another national election in late 2018 - just months before Britain is due to leave the EU in March 2019.

The bank's analysts said a Labour victory could mark the biggest shift in British politics since the late 1970s when Margaret Thatcher won victory and started to privatise chunks of the economy.

"It is certainly plausible that the Labour Party could ultimately moderate some of its more radical policy ideas; the alternative could be the most significant political shift in the UK since the end of the 1970s," Morgan Stanley said in the note.

Corbyn has cast bankers as the villains behind the 2008 financial crisis and promised to increase taxes on the banks and investment funds which trade out of London, the only financial capital to rival New York.

Corbyn said banks like Morgan Stanley were speculators.

"These are the same speculators and gamblers who crashed our economy in 2008 and then we had to bail them out," Corbyn said. "Their greed plunged the world into crisis and we are still paying the price."

Corbyn's manifesto promising renationalisation, higher public spending and tax rises for the rich won him 40 percent of the votes cast while May's Conservatives won 42 percent.

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CARACAS (Reuters) - Venezuelan authorities detained former Oil Minister Eulogio del Pino and former state oil company PDVSA president Nelson Martinez overnight as a part of a broad anti-corruption probe, two sources told Reuters on Thursday.

It was not immediately clear why the two men were detained. One source said it appeared they had been held for questioning. State prosecutor Tarek Saab was due to hold a press conference to announce new arrests later on Thursday.

(Reporting by Alexandra Ulmer)

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By Alexandra Ulmer and Deisy Buitrago

CARACAS (Reuters) - Venezuelan authorities on Thursday arrested two once-powerful officials who had run the oil ministry and state energy company PDVSA as part of a deepening industry purge also seen as a power play by leftist President Nicolas Maduro.

In the highest-profile arrests to date, engineer Eulogio Del Pino and chemist Nelson Martinez were detained early on Thursday on accusations of graft and seeking to sabotage the nation's ailing energy industry, prosecutor Tarek Saab said in a televised speech.

He accused Del Pino of participating in a $500 million corruption and sabotage scheme at the Petrozamora joint venture with Russia's Gazprombank and said Martinez had allowed a poor refinancing deal for Venezuela's Citgo Petroleum Corp, a U.S.-based refiner that he used to lead, to go ahead without government approval.

"We're talking about the dismantling of a cartel of organized crime that had taken over PDVSA," Saab said as state television flashed a video of armed military intelligence agents knocking on a door and images of the two men being arrested.

Maduro has promised a vast anti-corruption purge to cleanse the oil industry of "mafias." Some 65 executives have been detained so far, panicking PDVSA workers, depriving Venezuela's oil industry of much of its top brass, and stalling decision-making in the company overseeing the world's biggest crude reserves, insiders say.

The opposition dismisses the probe as a power struggle within Maduro's inner circle, noting that the industry has been under tight control of the ruling Socialist Party since early in the late President Hugo Chavez's 14-year rule.

They say authorities ridiculed and dismissed a report last year by the opposition-run Congress, which concluded that some $11 billion went missing at PDVSA over a decade when Del Pino and Martinez were both influential officials.

Insiders instead say the probe is politically motivated, likening it to a recent crackdown on graft in Saudi Arabia that has strengthened the power of Crown Prince Mohammed bin Salman.

PDVSA and Venezuela's Information and Oil Ministries did not immediately respond to requests for comment. Reuters was unable to contact Del Pino or Martinez.

EYES ON RAMIREZ

The arrests of Del Pino and Martinez have brought more attention to Rafael Ramirez, who was Venezuela's all-powerful oil czar for a decade and under whom both men ascended.

Maduro fired Ramirez, who was thought to have presidential ambitions, from his job as representative to the United Nations on Tuesday and summoned him back to Caracas, according to people with knowledge of the situation.

Those people say a protracted rivalry between the two men has deepened in recent weeks, especially after Ramirez wrote online opinion articles from New York criticizing PDVSA's production slump and Maduro's handling of the economy.

Saab did not mention Ramirez by name, although both Maduro and top officials have recently repeatedly referred to his governance as oil boss as a time when "mafias" were formed and executives came to think of themselves as the owners of Venezuela's reserves.

Ramirez's next moves were not immediately clear. He did not respond to a request for comment on Thursday.

Authorities appear to be seeking information on Ramirez from Del Pino and Martinez as splits widen in the Socialist Party, which is no longer controlled by the charismatic Chavez, according to one source with knowledge of the detentions.

Del Pino, wearing a Venezuelan national soccer team shirt, was picked up at his Caracas home, according to the source and a photo flashed on state television.

MADURO AMASSES POWER?

Oil industry sources say Maduro is using the graft probe to sideline political rivals and consolidate his grip on a sector that, despite falling investment and output, brings in more than 90 percent of the cash-strapped country's export income.

The unpopular leftist appears to be seeking to shore up his position ahead of a presidential vote in 2018, when he is poised to seek reelection despite an economic crisis that has sparked food shortages and the world's highest inflation.

After surviving major political protests and pushing through a controversial pro-government legislative superbody, Maduro is feeling empowered, according to government insiders and opposition politicians.

To ensure he maintains support, military and political sources say that Maduro, who unlike Chavez does not hail from the army, has handed it more power.

Del Pino and Martinez had been removed from their posts on Sunday and replaced by a major general, giving the already powerful military further clout.

Their sidelining also deprives the Venezuelan oil sector of two of its most experienced executives, who were also adamant that the country must keep paying its onerous debt and avoid a debilitating default at all costs.

Del Pino did not respond to a Whatsapp message, although his profile picture had changed to one of his children from a photo of him at a PDVSA event with red-shirted workers.